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The high stakes of low carbon for utilities

To sharpen their competitiveness, utilities need to harness low carbon business models enabled by digital.

Overview

In the coming 15 years, electric utilities need to create sustainable businesses by reducing their carbon footprint by 50 percent. Change won't be easy by any stretch. But industry players that adopt new digitally enabled business models will stave off emerging competitors that haven't, so far, reached scale. The goal? To meet the growing demand from regulators, the financial community and customers who want more action on emissions reduction.

The stakes are high. It’s time for electricity companies to elevate their game and digitalize with low carbon business models, or risk becoming obsolete.

Key Findings

To offset the rising costs and decreasing demand for fossil fuels, and to up their competitiveness when it comes to new rivals, utilities need to adopt low carbon business models. Switching from selling volume to delivering energy reduction and energy services to generate long-term value.

Five new, digitally enabled and low-carbon business models, which are described in detail in the joint Accenture Strategy and CDP report “Low Carbon High Stakes: Do You Have the Power to Transform?” are:

Energy-as-a-service provider

Local low-carbon energy access provider

Large-scale low-carbon electricity generator

Distribution optimizer

Carbon capture and use operator

These business models are not mutually exclusive. And no single option will work for all electric utilities. Instead, companies should consider the merits of each as they make portfolio investment and improvement decisions.

Recommendations

What can utility companies do to increase competitiveness?

Embrace digital models: Big wins in customer value are expected for those that harness technology and move quickly to market innovative services.

Shape the legislative landscape of tomorrow: Electricity companies should be more assertive, pushing the boundaries of existing regulatory frameworks given the limited time-scale of the ambitious transition to low-carbon.

Treat carbon like a financial asset or liability: Utilities need to change the way they view carbon. One of the trends emerging from the Paris Climate Summit is a mechanism for the international transfer of emissions reductions.

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